Ministry of Economy and Finance Includes Past Performance in 'Public Institution Asset Sale Results'

Public Institution Innovation Plan Q1 Implementation Performance Review
Remaining Payments for Gwangwoon University and Seoul Station North Sold Before Innovation Plan Also Counted as Performance
Ministry of Economy and Finance "Considering the Special Nature of Station Area Development Projects"

The Ministry of Economy and Finance has included the remaining payments for idle land at Kwangwoon University and the northern part of Seoul Station, currently being sold by Korea Railroad Corporation, in the public institution asset sales performance from last year through the first quarter of this year. While the sales of idle office buildings and company housing were reflected based on the sale date, Kwangwoon University and the northern part of Seoul Station were recorded based on the actual amounts paid, including interim and final payments.

On the 20th, the Ministry of Economy and Finance announced the results of the first quarter performance review of the public institution innovation plan.

According to the announcement, as of the end of March, 20.6% of the KRW 6.8 trillion asset efficiency plan for 2022-2023, announced last November, has been completed, amounting to KRW 1.4 trillion across 208 cases.

This performance includes KRW 490.1 billion from Korea Railroad Corporation’s sales of Kwangwoon University, northern Seoul Station, and Gupo Port Station. The Ministry had previously stated the amount as KRW 1.2977 trillion during a pre-briefing the day before but later revised it. The Ministry explained, "An error occurred in the first quarter performance because the total sale amount (KRW 1.2977 trillion) was counted instead of the amount paid from the second half of 2022 to the first quarter of 2023 (KRW 490.1 billion)."

Accordingly, the sales performance for the Kwangwoon University station area was adjusted from the total sale amount of KRW 501.7 billion to KRW 203 billion, and the northern Seoul Station area was reduced from KRW 532.6 billion to KRW 106.5 billion.

According to Onbid, the online public asset disposal system, and Korea Railroad Corporation, the idle land at Kwangwoon University station was auctioned in 2017 and a sales contract was signed, with the final payment completed last year. The northern Seoul Station sale contract was signed in 2019, and the final payment is expected to be completed this year. The government had already signed the sales contracts before announcing the 'Asset Efficiency Plan' last November, and only the remaining payments were due last year and this year.

The Ministry of Economy and Finance had explained that the asset sales performance was based on the 'completion of sales contract signing,' but in reality, the performance included payments made after the second half of 2022.

However, other asset sales performances were based on the contract signing date. For example, Korea Electric Power Technology’s old office site in Yongin was auctioned for KRW 95.8 billion in March last year, and the contract was signed the following month. Only part of the total sale amount, including the deposit, has been paid so far, with the final payment scheduled for completion in 2025. Unlike the Korea Railroad Corporation idle land case, the Ministry counted the total sale amount as performance.

A real estate industry official said, "Typically, asset sales are based on the contract signing date, and it is unreasonable to count interim and final payments as part of public institution sales performance," adding, "It seems that a flexible standard was applied to asset sales performance to emphasize that public institution innovation is progressing smoothly."

Regarding this, a Ministry of Economy and Finance official said, "It is true that the sales performance for Kwangwoon University and northern Seoul Station was applied differently from other asset sales," and explained, "Unlike idle office buildings or company housing, station area development is a long-term project with significant uncertainties, so we judged that the actual money received, i.e., the payments made, is meaningful and reflected it in the performance."